Types of and Criteria for Unfair Business Practices and Abuse of Market-Dominant Position Relating to Newspaper Business
Enacted by Fair Trade Commission Notification No. 2001-7
June 30th 2001
Amended by Fair Trade Commission Notification No. 2003-3
May 27th 2003
We hereby designate this Notification for the Types of and Criteria for Unfair Business Practices and Abuse of Market-Dominant Position Relating to Newspaper Business in accordance with Paragraph (2) of Article 23 (Prohibition on Unfair Business Practices) of the Monopoly Regulation and Fair Trade Act (hereinafter, the "Act") and Paragraph (1) and (2) of Article 36 of the Enforcement Decree of the Act; Paragraph (2) of Article 3-2 of the Act and Paragraph (6) of Article 5 of the Enforcement Decree of the Act.
May 27, 2003
Korea Fair Trade Commission
Types of and Criteria for Unfair Business Practices and Abuse of Market-Dominant Position Relating to Newspaper Business
Article 1Purpose
The purpose of this Notification is to set forththe types of and criteria for unfair business practices and marketdominance abusessubject to the prohibitions under Paragraph (1) of Article 23 (Prohibition on Unfair Business Practices) or Paragraph (1) of Article 3-2 (Prohibition on Abuse of Market Dominant Positions) of the Act regarding newspaper business (business of publishing or selling newspaper; hereinafter, the same shall apply) and ultimately aims to establish fair trade rules in the newspaper industry by enhancing consistency and objectivity of law enforcement, preventing and deterring violationsby newspaper companies and supporting voluntary compliance efforts of the concerned trade associations, etc.
Article 2Definitions
(1)"Newspaper" means newspaper that is published for profit purpose, including "general daily newspaper", "special daily newspaper", "general weekly newspaper" and "special weekly newspaper" under Subparagraph 2, 3, 5 and 6, Article 2 (Definitions) of the Registration, etc. of Periodicals Act.
(2) "Free Copy" means newspaper excluding paid newspaper supplied by a newspaper publisher or a newspaper seller to a newspaper seller or a subscriber and including promotional copies and back copies. However, free newspaper supplied to remoteislands, military base, etc. for the public good or extra copies shall be excluded.
(3) "Paid Newspaper" means newspaper distributed by a newspaper publisher or a newspaper seller for charge, including newspaper delivered to households, delivered through mail, sold at newsstands and sold through other means. Details related to these matters shall be subject to the relevant rules issued by the Korea Audit Bureau of Circulation (KABC).
(4) "Gift" means any cash, marketable securities, goods, services and other economic benefit that a newspaper publisher or a newspaper seller directly or indirectly offer to subscribers of the newspaper.
Article 3Limitation on Distribution of Free Copiesand Gifts
(1) The acts in the following subparagraphs shall fall under the acts of "unduly luring away customers to leave competitors to deal with oneself" as stipulated in the first half of Subparagraph 3, Paragraph 1, Article 23 (Prohibition on Unfair Business Practices) of the Act.
1.The total value of free copies and gifts offered by a newspaper publisher to a newspaper seller for one month exceeds 20% of the charge for paid newspaper received from the said newspaper seller during the same period.
2.The total value of free copies and gifts offered by a newspaper seller to a reader for one month exceeds 20% of the charge for paid newspaper received from the subscriber during the same period. The same shall apply when the subscription period is shorter than one year.
3. The total value of free copies and gifts offered by a newspaper publisher directly to a subscriber for one month exceeds 20% of the charge for paid newspaper received from the said subscriber during the same period.
(2) In applying Paragraph 1, the "value of free copies" shall be computed by using the unit price of paid newspaper traded between the parties concerned, and the "gifts" offered by a newspaper publisher to a newspaper seller shall mean those that are offered based on the premise/assumption that such gifts will be delivered to subscribers.
(3) Notwithstanding Paragraph 1 and 2, the followings shall not be the offering of gifts.
1.The offering of economic benefits such as product or cash donation to the victims of natural disasters such as fire and flood and which is deemed reasonable in light of ordinary commercial practices.
2.The offering of small publications, etc., which contain the exact contents of its newspaper without revision and which is deemed reasonable in light of ordinary commercial practices.
3.The offering of considerations for special labors of readers such as readers’contributions or reader’s interviews and which is deemed reasonable in light of ordinary commercial practices.
4.The offering of invitations to events, etc. that are not confined to subscribers and which is deemed reasonable in light of ordinary commercial practices.
(4) Where a newspaper publisher is directly or indirectly involved in the gift offering activities of a newspaper seller as in the following subparagraphs, the newspaper publisher shall be deemed to have performed such activities.
1.A case where a newspaper publisher devises a plan to offer gifts, covers the entire or partial cost to make a blanket purchase of the gifts and allocates the purchased gifts to newspaper sellers
2. A case where a newspaper publisher encourages, induces etc. a newspaper seller to offer gifts even though the publisher does not devise a concrete plan to offer the giftsnor directly cover the entire or partial cost of purchasing gifts.
Article 4Prohibition on Act of Unduly Luring Away Customers
The acts in the following subparagraphs shall fall under the acts of "unduly luring away customers of competitors to deal with oneself" under Subparagraph 3, Paragraph 1, Article 23 (Prohibition on Unfair Business Practices) of the Act.
1. An act by a newspaper seller of continuing the newspaper delivery for seven or more days to a person who expressed his/her intention to terminate subscription after the subscription contract expired.
2.An act by a newspaper publisher or a newspaper seller of luring away a customer of competitor to deal with oneself, either directly or through a third party, by using methods other than the offering of gifts - payment of newspaper charge, tie-in of other periodicals, excessive price discount, etc.– under the premise of offering a consideration which is deemed excessive in light of ordinary commercial practices.
3.An act by a newspaper publisher of inducing an advertiser to request the insertion of an advertisement to oneself by misleading the advertiser through the inclusion of scrapped copies, which are not actually distributed to the readers, into the circulation.
4. An act by a newspaper publisher of inducing a customer to request the insertion of an advertisement by offering to provide benefits such as the printing of an article favorable to the customer in his/her newspaper.
Article 5Prohibition on Abuse of Superior Bargaining Position
The acts in the following subparagraphs shall fall under the acts of "unduly taking position in trading with other party" under Subparagraph 4, Para advantage of one's bargaining graph 1, Article 23 (Prohibition on Unfair Business Practices) of the Act.
1. An act by a newspaper publisher of coercing a newspaper seller into increasing sales target against his/her will without prior consultation.
2. An act by a newspaper publisher of unduly determining or modifying circulation volumes, unit price, sales territory without prior consultation with a newspaper seller.
3. An act by a newspaper publisher of coercing its transacting partner such as a raw material supplier into providing equipment, etc. or coercing him/her to providing cash, product, service and other economic benefits for certain events.
4. An act by a newspaper publisher of unilaterally inserting an advertisement in its newspaper without receiving the order from a customer and coercing the customer into paying the advertisement fee.
5. An act by a newspaper publisher of unduly coercing a customer which has continued trade relationship for a certain period into paying unreasonably high advertisement feewithout prior consultation.
Article 6Prohibition on Discriminatory Treatment
An act of a newspaper publisher of unduly trading under significantly favorable or unfavorable terms of trade in light of ordinary commercial practices in the distribution of newspaper to a newspaper seller depending on transaction partner or transaction territory and an act of a newspaper seller of unduly trading under the terms and conditions significantly favorable or unfavorable in light of ordinary price or terms of trade depending on requester of the delivery of advertisement leaflets in the sale of newspaper shall fall under the "undue discrimination against a certain trade partner" stipulated under the latter part of the Subparagraph 1, Paragraph 1, Article 23 (Prohibition on Unfair Business Practices) of the Act.
Article 7Prohibition on Coercion in Dealing
The acts in the following subparagraphs shall fall under the acts of "unreasonably coercing customers of competitors to deal with oneself" as stipulated in the latter half of Subparagraph 3, Paragraph 1, Article 23 (Prohibition on Unfair Business Practices) of the Act.
1.An act by a newspaper publisher of coercing or forcefully inducing its employees into buying or selling newspaper, magazine, or other publications issued by the publisher, specially related persons or subsidiaries and which is deemed unreasonable in light of ordinary commercial practices.
2. An act by a newspaper publisher of hiring an employee on a unconventionally low or no salary basis and coercing him/her into selling the feature product of the advertisement on a condition that the said publisher pay him/her a certain portion of the fee of advertisement placement which s/he has attracted; provided, however, that this shall not apply ifsales person in charge of attracting advertisement placement is paid socially acceptable performance rewards.
3. An act by a newspaper publisher, with a view to inducing ad placement order, of expressing its will to inflict disadvantages - such as a inclusion of unfavorable article in its newspaper - upon the customer or of inflicting such disadvantages on the customer.
4. An act by a newspaper publisher of unduly inducing a newspaper seller in light of ordinary commercial practices to purchase newspaper, magazine or other publications issued by the publisher itself, speciallyrelated person, or subsidiary in its distribution of newspaper copies.
Article 8Prohibition on Exclusive Dealings with Newspaper Sellers
An act by a newspaper publisher of unduly preventing a newspaper seller from selling newspaper of other publisher, not based on prior contract or agreement, shall fall under the acts of "transacting with others on terms and conditions whichunreasonably restrict business activities" as stipulated in the first half of Subparagraph 5, Paragraph 1, Article 23 (Prohibition on Unfair Business Practices) of the Act.
Article 9Prohibition on Refusal to Deal
An act by a newspaper publisher of unduly discontinuing or significantly limiting the newspaper supply,not based on contract terms for supply limitation or supply termination or prior-agreement, shall fall under the acts of "unreasonably refusing to transact" as stipulated in the first half of Subparagraph 1, Paragraph (1), Article 23 (Prohibition on Unfair Business Practices) of the Act.
Article 10Prohibition on Abuse of Market Dominant Position
(1) An act by a market-dominant newspaper publisher of unreasonably fixing, maintaining, or altering sales price or advertisement fee considering cost fluctuationfactor, etc. shall fall under the acts of "unreasonably fixing, maintaining, or altering the price of a good or service fees (hereinafter, "Price")" as stipulated in Subparagraph 1, Paragraph (1), Article 3-2 (Prohibition Against Abuse of Market-Dominant Positions) of the Act.
(2) An act by a market-dominant newspaper publisher of providing newspaper to its newspaper sellers at an unreasonably low price and thereby possibly eliminating other newspaper publishers shall fall under the acts of "engaging in unreasonable transaction to eliminate competitors" as stipulated in the first half of Subparagraph 5, Paragraph (1), Article 3-2 (Prohibition Against Abuse of Market-Dominant Positions) of the Act.
(3) An act by a market-dominant newspaper publisher of engaging in transaction on a condition that its transactingpartners such as an advertiser, etc. do not deal with other newspaper publishers shall fall under the acts of "engaging in unreasonable transaction to eliminate competitors" as stipulated in the first half of Subparagraph 5, Paragraph (1), Article 3-2 (Prohibition Against Abuse of Market-Dominant Positions) of the Act.
(4) An act by a market-dominant newspaper publisher of printing slanderous article with false or groundless information in its newspaper and thereby hampering business activities of its transacting partner such as an advertiser, etc. shall fall under the acts of "unreasonably interfering in the business activities of other Enterprises" as stipulated in Subparagraph 3, Paragraph (1), Article 3-2 (Prohibition Against Abuse of Market-Dominant Positions) of the Act.
Article 11Relationship, etc to Fair Competition Code of Trade Association
In enforcing this notification, the KFTC shall let the trade association implement the case by applying the fair competition code(hereinafter, “Fair Competition Code”), if the association enforced the fair competition code which is not against the notification. However, if the KFTC deems that it is more effective for the trade association to address the case thereby consulting with the association as such, the KFTC shall direct the trade association to address the case by applying the same code.
Article 12Relationship to Other Notifications
In governing newspaper business, this Notification takes precedence over the Notification on the Types of and Criteria for Unfair Business Practices Relating to the Offering of Gifts (Fair Trade Commission Notification No. 2000-3) and the Notification on the Types of and Criteria for Abuse of Market-Dominant Positions (Fair Trade Commission Notification No. 2000-6) respectively.
ADDENDA <2001>
1【Effective Date】This Notification shall take effect on July 1, 2001.
2【Interim Measures Regarding Undue Support】With respect to undue financial, asset, and manpower support activities in newspaper industry, Article 23, Paragraph (1), Subparagraph 7 of the Act and Subparagraph 10 of Appendix 1 under Paragraph (1) of Article 36 of the Enforcement Decree of the Act shall apply.
ADDENDA < May 27th 2003>
This notification will take into effect from May 27th 2003.